The dominant lion may lounge around the place… but when his territory and pride are threatened, he’ll stop at nothing to protect them. And a typical gorilla father will go to battle with other males, who are known to kill baby gorillas as they try to take over the group. Meanwhile, Emperor Penguin dads are super protective over their mates, their young and the nest, possibly because they play an important role in keeping the eggs warm – balancing it between their bellies and the top of their toes!
These animals are all involved in some kind of asset protection … and it’s often a matter of life and death.
No surprise that humans need to take asset protection seriously too and the stakes can be pretty high. Asset Protection involves keeping your property out of the hands of someone asserting a right against you, perhaps to satisfy a loan or because of litigation. It is sensible to engage in Asset Protection Planning, whereby non-exempt assets (those subject to creditors’ claims) are repositioned as exempt assets (those not accessible to creditors).
Let’s be clear that there are laws in most territories that protect creditors against the transfer of assets with the intent to hinder, delay, or defraud a creditor. These transfers will likely be deemed fraudulent and may be reversed by a court. So Asset Protection Planning needs to begin early on the basis that life is uncertain, business is uncertain and there is always the chance of claims against assets.
Asset Protection Planning is closely tied up with your Financial Plan which is based on analysis of your sources of income, current and future expenses, how much wealth you plan to accumulate and what you want to leave to your heirs. Part of the plan is to reposition (current and future) assets so they are exempt from creditors.
Your Financial Plan is closely related to your Estate Plan which defines who will manage your assets and take care of your family after you die (or become incapacitated). Certain corporate and trust structures may protect your heirs from claims against the family assets, giving everyone peace of mind.
It’s essential to consider this early. And talk to an advisor. Your accountant is well-placed to help you!
Most humans will not have to fight an invader to the death but neglecting to plan can have devastating consequences.
When did you last increase your prices? If you’re like many business owners you might say it’s been quite a long time since you did that. Rarely do our clients receive push back from customers when they increase their prices. Usually, the customers who leave because of a price increase are the customers you want to lose in the first place.
Pricing is the key to your profit margins, so let’s begin by defining what profit margins are. There are two important numbers for business owners to know.
Your gross profit margin, otherwise known as gross profit percentage, is calculated by your sales and deducting your direct costs. Direct costs are usually labor and materials – the costs in producing what you sell. This leaves you with your gross profits. Divide that number into the sales for your gross profit percentage.
The other important key performance indicator is your net profit percentage. Start with your gross profit which we just calculated and deduct all of the other expenses in your business to give you your net profit. Then take your net profit and divide that into your sales to give you your net profit percentage.
Now that we understand the terminology, let’s consider a big impact on your pricing.
An important component of pricing is how much you give away every time you make a sale, otherwise known as discounts. Discounting is not covered by a strong policy in many businesses and salespeople can give away too much in order to close a sale. An additional 5% of discounts given away on top of your normal policy can make a big difference to your profit.
Do this simple calculation. Take the total sales in your business and divide that number by 100. Every time you can improve your gross profit percentage by 1%, the resulting number drops to the bottom line.
Take this simple example. Imagine your sales are $1,000,000. Divide that by 100 – the result is $10,000. Every 1% increase in your gross profit percentage will drop $10,000 to your bottom line.
That’s more money you can take out of your business, and that’s worth doing something about. Because of our strength in numbers we can help you in this area of pricing.
We look at each of your products and the profit margins you’re achieving on each one. We also look at your discounting policy and make sure you’re not losing sales revenue as a result of people abusing those policies. We also look at your results against industry benchmarks and provide recommendations to help you improve your profit margins.
Let’s have a conversation if a look at your pricing and discount policies would benefit you. We would love to discuss how we can help improve your profit margins.
